Many emotional issues need to be worked through when a couple begins the divorce process. That becomes so draining that, when they are finally ready to evaluate the financial repercussions of their settlement offers, they tend to rush through this process because they want it "over with".

There are two significant problems I have noticed when a couple begins to evaluate settlement offers. The first is that a settlement may seem fair on the surface, but may not be if projected forward several years. Most people do not project offers for a sufficient period into the future to understand the full repercussions. Often, the person with less earning potential is the one who gets into financial trouble because of this lack of planning. This is usually because they left the workforce to raise a family. And, even if they return to work, their income potential is much less than their spouse. Therefore, a few years after the divorce that spouse tends to have spent the retirement plan money, the IRA and the savings.

The second problem is that most couples do not understand the impact of settlement offers and counteroffers. They do not understand the rules associated with different types of investments, nor are they aware of the possible penalties of liquidating certain investments. And, many do not understand the tax importance of knowing cost basis information on investments prior to settling. That later surprise could cost plenty.